41 Oser, Highlighting Thorstein Veblen: "The extension of credit enables competing businessmen to bid up the prices of the material capital goods used in industry. As their dollar value increases, these goods serve as collateral for the further extension of credit. The extension of loans on collateral such as shares of stock or real property has a cumulative character. Credit expands even more with the organization of monopolies, for the costs of the re-organization and the promoter's profits are capitalized in the securities issued. The expected increase in the profits of the monopolies and the imputed goodwill of the new corporations also are capitalized. This cumulative extension of credit rests on a shaky foundation. Sooner or later a discrepancy will arise between the money value of the collateral and the capitalized value of the property computed on expected earnings. In other words, the rise in earnings does not keep pace with the inflation of the nominal capital (capital plus loans). When this discrepancy becomes obvious, a period of liquidation begins. Along with liquidation, the industrial crisis is accompanied by credit cancellations, high discount rates, falling prices, forced sales, shrinking of capitalization, and reduced output. The creditors take over the business properties, therby further consolidating ownership and control in fewer hands. From: Oser, Jacob. "The Evolution of Economic Thought, 3rd. ed. Harcourt Publishers, San Diego: 1975. p.378-379.
42 Frederick Soddy, Nobel Laureate in Chemistry was critical of debt: "Debts are subject to the laws of mathematics rather than physics. Unlike wealth, which is subject to the laws of thermodynamics, debts do not rot with old age and are not consumed in the process of living. On the contrary, they grow at so much per annum, by the well-known mathematical laws of compound interest". ..´ "The century that has come and gone has seen a steady alteration in the significance of the word 'wealth' from its original [Saxon] meaning wealth, as the requisites that enable and empower life, to debt, the right of the creditor to demand wealth and the duty of the debtor to supply it".
Soddy, Frederick. "Wealth, Virtual Wealth and Debt: A Solution to the Economic Paradox". George Allen & Unwin Ltd. London: 1926.
43 As Michael Hudson has argued, real economic growth rates in Europe since the time of Christ have been close to 0.2 percent. Interest rates have certainly been much higher. See: Hudson, Michael, "The Mathematical Economics of compund interest: a 4,000 year review". Journal of Economic Studies 274/5. 2000 MCB University Press
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